ODAC Newsletter - Aug 27

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.

Cairn Energy announced this week that it had found evidence "indicative of an active hydrocarbon system" off Greenland. The news comes in the middle of a bidding round for oil and gas exploration licences there. The US Geological Survey estimated in 2008 that the region contains approximately 90 billion barrels of technically recoverable oil, but producing the stuff would combine the extreme challenges of deepwater drilling, extreme cold, and ice. Any accident would be massively harder to deal with than Deepwater Horizon because of the country's remoteness.

News of the Cairn discovery, while popular with many in Greenland who hope that the revenues might help them win full independence from Denmark, was met by dismay from environmental groups; Greenpeace sent its ship the Esperanza to protest. On Wednesday, BP, whose safety reputation is now in the toilet, said it would not take part in this licensing round, no doubt to the great relief of the rest of the industry.

It seems the impact of the Deepwater Horizon disaster on the industry may have been exaggerated: the New York Times reports that the thousands of Gulf Coast job losses that were predicted have not materialized. In the UK however the Health and Safety Executive, which has increased its inspections in the wake of the disaster, warned companies that their safety record was "simply not good enough", after reporting a significant increase on the number of leaks.

The Observer published a piece this week reporting on the UK government's "secret" peak oil alarm. The article appears to refer to the government's canvassing of expert opinion for the 2050 Pathways Analysis review referred to in ODAC's 30th July newsletter. It also brings up the Chatham House rules meeting on peak oil between DECC and invited experts which was reported on in our March 26th newsletter. The article implies a cloak and dagger scenario which feels a little overdone on this occasion. ODAC looks forward to seeing the results of the governments peak oil review along with its white paper on energy at the end of the consultation period.

Oil

Cairn Energy Plc fell in London trading after its first well off Greenland found natural gas rather than crude oil.

An exploration well encountered gas in thin sands in the Baffin Bay basin, the company said in a statement in London today. The find is "indicative of an active hydrocarbon system" and the well hasn't yet reached target depth, it said...

A Danish warship today confronted a Greenpeace ship which is on a mission to target "dangerous" deep sea oil drilling sites, the environmental group claimed.

The incident happened in the freezing seas off Greenland as the protest ship Esperanza approached one of the world's most controversial oil drilling projects operated by the British company Cairn Energy, said Greenpeace...

BP has been forced to abandon hopes of drilling in the Arctic, currently the centre of a new oil rush, owing to its tarnished reputation after the Gulf of Mexico spill.

The company confirmed tonight that it was no longer trying to win an exploration licence in Greenland, despite earlier reports of its interest. "We are not participating in the bid round," said a spokesman at BP's London headquarters, who declined to discuss its reasons for the reverse...

The BP oil spill was a massive "failure" in government oversight and administrations should be forced to consult with experts in the field before making expansive drilling policy, top officials of the White House's oil spill commission said on Wednesday.

Commission Co-chairman Bob Graham, a former U.S. Senator from Florida, said regulators and offshore drillers were aware of the possibility of a major well blowout, such as the one that caused the BP spill, but ignored the risks...

When the Obama administration called a halt to virtually all deepwater drilling activity in the Gulf of Mexico after the Deepwater Horizon blowout and fire in April, oil executives, economists and local officials complained that the six-month moratorium would cost thousands of jobs and billions of dollars in lost revenue.

Oil supply firms went to court to have the moratorium overturned, calling it illegal and warning that it would exacerbate the nation's economic woes, lead to oil shortages and cause an exodus of drilling rigs from the gulf to other fields around the world. Two federal courts agreed...

As John Broder and I report in Wednesday's Times, the economic impact of the Obama administration's moratorium on new deepwater drilling since the BP accident has been far less than many people predicted.

A negative impact has been even harder to find in other countries despite the fact that companies around the world use much the same equipment under similar industry protocols. Large offshore accidents in Mexican, British and Australian waters since the late 1970s barely slowed deepwater development, and history may well be repeating itself...

Speculation that government ministers are far more concerned about a future supply crunch than they have admitted has been fuelled by the revelation that they are canvassing views from industry and the scientific community about "peak oil".

The Department of Energy and Climate Change (DECC) is also refusing to hand over policy documents about "peak oil" — the point at which oil production reaches its maximum and then declines — under the Freedom of Information (FoI) Act, despite releasing others in which it admits "secrecy around the topic is probably not good"...

Crude oil fell, heading for its third weekly decline as a slowdown in U.S. manufacturing added to concerns that the economic recovery is faltering.

Prices have lost 0.5 percent this week following gains in U.S. crude inventories. The U.S. economy probably slowed in the second quarter even more than initially estimated as companies reined in inventories and the trade deficit widened, economists said before a report today...

Iraq

Insurgents launched what seemed to be a coordinated wave of attacks on police forces across Iraq on Wednesday, intensifying their onslaught as the American military prepares to switch from combat operations to a training and assistance role at the end of the month.

Security members gathered at the site of a bomb attack in Basra, Iraq, on Wednesday. In northern Baghdad's Qahira district, a car bomb killed 15 people and wounded more than 50 in an assault on a police station, according to an official at Iraq's Interior Ministry. The blast flattened the building and other houses nearby, spread rubble in the street and shattered glass more than half a mile away, according to reporters who visited the scene...

Gas

The United States has offered to help major economies such as China and India develop shale gas, a rapidly growing sector in North America which US officials bill as a clean alternative.

Twenty nations held two days of talks in Washington in first-of-a-kind shale gas talks initiated by the United States, where some forecast that shale -- a miniscule presence a decade ago -- could dominate the gas market by 2030...

Natural gas for January delivery is trading at the smallest premium to September futures in seven years as traders speculate that economic growth will slow.

January futures, covering the period when North American heating demand typically peaks, were 69.6 cents higher today than gas for September delivery. That compares with an average spread of $1.58 over the past 10 years. The difference is the narrowest for the day since the summer of 2003, when stockpiles indicated ample winter inventories...

The Nabucco pipeline project has taken another step forward by ordering engineering work for two feeder lines from Turkey to Iraq and Georgia. However, a third planned feeder line from Turkey to Iran has been put on the back-burner due to political considerations, the consortium announced.

At a recent Steering Committee meeting in Ankara, Nabucco shareholders agreed to modify the feeder line concept, a press release says. Due to the current political situation, they decided to put on hold the third feeder line to the Turkish-Iran border...

Nuclear

Chancellor Angela Merkel challenged German atomic-power plant operators E.ON AG and RWE AG to come up with alternatives to a planned tax on nuclear fuel that they oppose, sharpening her conflict with utilities and industry.

Merkel, in her first television interview since returning from summer vacation, refused to budge on the tax on utility profits announced in June, saying the government needs the 2.3 billion euros ($2.9 billion) in annual revenue...

The utility firm takes advantage of the UK Government's recent feed-in-tariff (FITs) to encourage people to generate their own low-carbon energy including solar photovoltaic (PV) panels.

British Gas is the latest company in a host of firms offering to install electricity-generating systems on homes in order to take advantage of a UK Government scheme that will pay the owners of solar PV panels for the electricity they generate...

Food

Mining giant BHP Billiton has made its bid for Canadian group PotashCorp of Saskatchewan because it sees a bright future for agricultural commodities. It looks like a very sensible move — providing the price is right.

Demand for potash will increase as the global population grows — and prices are likely to move higher. This means grain prices are likely to rise too.

This is bad news for farmers — and ultimately consumers — because it means the price of rearing animals is probably going to rise because of increasing feed costs. But it's not just feed prices that are going up and squeezing farmers' margins — the price of straw and hay is also heading higher...

Climate

Russian Prime Minister Vladimir Putin traveled beyond the Arctic Circle on Monday to look into evidence for climate change after a record heatwave ravaged central Russia this summer.

Putin, who has in the past displayed a light-hearted approach to global warming by joking Russians would have to buy fewer fur coats, flew to a scientific research station in the Samoilovsky island at the delta of Siberia's Lena River...

Event

The ASPO-USA Peak Oil Conference, October 7-9, 2010 in Washington, DC, is the world's premier event focused on peak oil challenges and solutions. It is produced by the nonprofit Association For The Study Of Peak Oil & Gas - USA (ASPO-USA). The format includes keynotes, plenary sessions, concurrent educational tracks, networking receptions, and exhibits. The conference is supported by more than 30 publications, websites and partnering associations. ODAC newsletter subscribers can receive a $50 discount off the Peak Aware Package registration option by inserting the code mediapartner when prompted on the eRegistration page linked from www.aspousa.org/worldoil2010/.

Editorial Notes: The Oil Depletion Analysis Centre (ODAC) is an independent, UK-registered educational charity working to raise international public awareness and promote better understanding of the world's oil-depletion problem.

Resilience is a program of Post Carbon Institute, a nonprofit organization dedicated to helping the world transition away from fossil fuels and build sustainable, resilient communities. Content on this site is subject to our fair use notice.